As a real estate professional, the title company or title attorney is a necessary part of the puzzle. But how much do you really know about what goes on there? And do they really provide more than just frustration and additional cost of insurance? I hope that in a series of posts, I can not only answer that question but give you an insight that can help you work hand in hand with the title company and give your borrowers/sellers a smoother transaction.
First, what exactly is a title company/title agent? A title company or title agent is an important component in the sale or refinance of real property. Not only are they an agent for a title insurance company (i.e. First American, Chicago Title, etc.) but they are responsible for completing a title search on the property to be sure there is ‘clear’ title. Clear title means that there are no issues that may bring into question whom rightfully owns the property, including any access rights, easements and rights of way to the property. It also ensures that there are no encumbrances on the property (i.e. unreleased mortgages, liens, judgments, etc.) that could cause someone other than the property owner to have rights to the property. Can you see how important this part is? No? Ok, let’s give an example.
Let’s say you and Cousin Jimmy inherited Grandma’s home. Cousin Jimmy agreed to sign a Quit Claim deed so that you were sole owner of the property. Great! Years later you’re ready to sell the property and move on. But apparently the deed from Cousin Jimmy never was recorded at the local Registry of Deeds. And sadly, he’s passed on. Now if you were able to sell the property without a title search, you might never find out that the deed wasn’t recorded, and somewhere down the line Cousin Jimmy’s daughter finds out that her father owned half of the place. Can you see the problem? The new owners would be in quite a pickle, since the title was never ‘clear’ or totally yours to transfer. And this is just one out of a myriad of reasons for the need of a title search.
The title company/agent also prepares for and conducts the real estate closing. It sounds pretty simple, but it actually involves a lot of work. The title processor is responsible for pulling together all of the information required for closing from many different parties. I’ll go into the details in a later post, but suffice it to say that it’s like putting together a jigsaw puzzle, bringing the pieces together until they have a complete closing file, ready to close.
And of course, the title company/title agent also provides the title insurance. Many people fail to understand a need for title insurance stating that they have homeowner’s insurance. However, title insurance isn’t about insuring the dwelling but rather about insuring the land your dwelling is on. Owners Title Insurance is coverage for the owner of the real property, usually issued in the amount of sales price. Owner's Title Insurance covers improperly executed documents, undisclosed restrictive covenants and unmarketable title just to name a few. Lender’s Title Insurance covers the lending institution for the amount of the loan and is generally a requirement of the loan. Lender's title Insurance covers things like improperly executed documents, defective recording of documents, and liens not disclosed in the policy among others.
In my next couple of posts I'm going to follow a real estate closing file from the time it arrives at the title company through the issuing of the title policy, along with giving tips and hints that you can do to help make the process smoother. I'll also try to include any questions that you may have, so feel free to leave comments or send me your questions.
Comments(2)